Monday, November 30, 2009

Banks traded higher after Goldman Sachs said that JPM, BAC & C and others US financials should avoid a major hit because they have a lot less direct exposure to Dubai than their European counter-parts. ~read~

I've posted several charts and suggested entry level for JPM over the last few weeks. ~read~

A look at a few charts this morning, GLD, SLV & USO. I've suggested that as gold spikes higher, that one should expect a pullback, Silver has yet to set a new high, but ytd has outperformed gold. For oil, it echoes the metals by 3 to 4 months and I believe and have posted several times, that it is primed to take off. Hence Transocean (RIG) & Pride Int'l (PDE). Also I posted a CNBC video clip from this morning in which James Richards, of Omnis Group; mentioned how oil may also spike on the possibility of an attack by Israel on Iran by March 2010.
*click charts to expand images

Sunday, November 29, 2009

As I suggested two-weeks ago ~link~ wait for a pullback in Pride Int'l (PDE) before stepping in, well that BUY ZONE is here. The $30 to $31 zone looks attractive, start accumulating. Latest report from Barron's ~link~

Gold looks like it is also set to pullback, my near term target is $1075. ~chart~As for the sell-off over Dubai, news over the weekend that the UAE central banks will stand behind lenders is reassuring to global markets ~story~. After all, its not the amount of money...BUT the fear of what could escalate that spooked markets again. Where there's smoke...there's fire!

The US Dollar continues to be the market barometer, it saw a flight to safety on the Dubai news Thursday/Friday. Dollar daily chartOn the Gold:Oil Ratio chart, it has been range bound since May and currently at the high end of 15.5. ~chart~

The coming week presents some important economic events. There are four ISM reports with the national manufacturing index on Tuesday. The Fed Beige Book is on Wednesday with another economic view of the various Fed regions. Then the big one on Friday; with the Non-Farm Payroll report for November. My gut feeling is with traders returning from holiday, the Dubai news overhang and upcoming economic news, volatility will pickup...the market has been to complacent. Use any pullbacks this week to load up on a Santa Claus rally.*click on chart to expand image

Friday, November 27, 2009

Quick note:Market confidence has been hit hard by Wednesday's news that Dubai World, a government investment company, has asked creditors if it can postpone its forthcoming payments until May. That stoked fears, mainly in Europe on Thursday, of a potential default and contagion around the global financial system, particularly in emerging markets.

Is this the unwinding of the Dollar Carry trade?

I stated in a recent post that gold could correct and to start shifting into oil. Use this opportunity to buy Pride Int'l (PDE) or add to Transocean (RIG).This coming week will be again pivotal as we get results from black Friday and Cyber Monday as well as Jobs Report on Friday. Along with the news from Dubai, so get out your wish list.More over the weekend as things develop.

As I write the 75 support level for the dollar appears to have given way, $USD trading @ 74.5...sending Gold to $1181 as well as Silver to $18.69. The Volatility Index ($VIX) is a 20.20 lowest since August 2008. Interesting too, is the Dollar hitting parity to the Swiss Franc.Talk in Europe of possible rate hike. ~read story~

Those that follow my blog, know it is skewed to the commodities and the lower trending dollar. I believe that oil will and is being pulled higher by the rise in gold and expect a new leg up very soon. I project $90+ oil by January 2010 and $100 in 6 to 9 months. ITZ PIX already has suggested Transocean (RIG) and has Pride Int'l (PDE) on the radar with a suggested BUY under $31.With Gold nearing $1200, one could expect this psychological level to be resistance and possibly see some profit taking. But my long term outlook for gold over the next several years is a possible double and the same for oil., base on a global recovery and the onset of inflation...yes INFLATION!*click chart to expand images

Tuesday, November 24, 2009

Gold has been on a tear, but no one is talking about the other 'Black' Gold...crude oil ($WTIC). It to has silently been setting up to run higher, my target has been $90 to $100 see past posts ~LINK~~LINK~~LINK~My favorite oil play has been Transocean (RIG) and Pride Int'l (PDE) is on the radar. PDE is a suggested buy under $31.*click chart to expand image

Monday, November 23, 2009

The Dow Jones Industrial Average $INDU has now put in about a 50% retracement from its '07 high to March '09 low. Not only in price...BUT in TIME too. Those that know of the famous chartist/mathematician WD Gann Price Time Studies ~link~ will understand. It took 17 months for the decline & 50% of that time 8 1/2 months to retrace 50% of the points, which also coincide to the downtrend resistance line. So what's next? if one follows this belief, it would mean in the next 4 months or so a 50% retracement should ensue? DJIA 8500? Or 12500? The trade for 2009 has been weak dollar = strong stock market. If that continues and the Dollar ($USD) breaks 75 support, we could see a rally into 2010 and a Dow @ 12500, if the Dollar rallies 8500.*click chart to expand images

The gold trade is getting crowded and looking at the GLD chart, you can see the parabolic move now. My concern is that if some geopolitical &-or financial event as back in March occurs...you could see a rush to the dollar again?? If so how would gold react? My view now is to get hedged or start lightening up on gold if you're heavily weighted in this sector. If investors and traders bail on the metals, the correction could be severe, just be ready!*click chart to expand image

Near term Yamana looks overbought and due for a pullback. Itz Pix suggested this stock back in July @ $8.50 and suggested a covered call Jan $14 bringing in 90 cents, overall cost basis $7.60.*click chart to expand image

Sunday, November 22, 2009

How 'Bullish' is this market? The Russell 2000 Small Cap Index is usually a leader into the year end. But, recently has been under performing the S&P 500 since October...which is a signal that fund managers remain skittish about this market. The Value Line Chart ($VLE) tracks the large and small cap combined, a break under the 80ema would be bearish, while a close over 2,200 would be bullish, watch this index.*click chart to expand image

Volatility is picking up as the dollar ticks up. Factoring in to todays move could be that tomorrow is Opex. Is this the 6% norm pullback or could it develop into more?*click chart to expand imageNeed to learn how to trade to stay ahead? For your best chances, click here

As I forewarned Genco Shipping was primed for a pullback after its recent rally. Don't forget tomorrow is OPEX and GNK is a high beta stock. Watching for the $24/$25 to be tested.*click chart to expand image

The Baltic Dry Index is hitting a new 2009 high today. Also as I posted last night, CNBC Mad Money, James Cramer is bullish on the shippers. His picks are Diana (DSX) ~chart~ & North american Tanker (NAT) ~chart~ , my pick for a few weeks now has been Genco Shipping (GNK). I wouldn't get in here but wait for a pullback.*click chart to expand image

Tuesday, November 17, 2009

James Cramer in tonight's Mad Money discussed the charts on several shipping stocks. Noting what I've been reporting on my blog over the last several weeks. Cramer's picks are dry bulk shipper Diana (DSX) & oil tanker North American Tanker (NAT), both good picks too. He did note that GNK is a more leveraged play, with a higher debt exposure. One other interesting point made by James Cramer, he is 'expecting' a pullback near term before getting in. BINGO! Spot on Jimmy! This is why I have suggested a Jan. $25 covered call, matter of fact for those looking to enter on any pullback consider selling a December $24 put. I'd wait until GNK drops below $25, of course there's 5 weeks left until expiration so the premium will decay. But worth a look, I follow up on this as we approach that time.
Below is an updated chart and the Mad Money vid clip.
*click on chart to expand image

This latest leg of the bull run has since the absence of the financial sector. If, the Dow is to rally to 12,000 it needs the financials to participate and the 'Best of Breed' in the banking sector for me is JP Morgan Chase (JPM). That said, as Meredith Whitney noted yesterday, she is more bearish on financials than ever before...yet to counter that John Paulson is loading up on Citibank? You decide who is correct! Here's a recent post I made ~link~

Research In Motion’s top executives say the BlackBerry will hold its ground in a fierce battle with Apple’s iPhone and other rivals, even as a boom in smartphone sales shakes up a market segment that their company once ruled. ~read more~

Silver Wheaton (SLV) has a possible downside risk near term of $14. I just recently suggested to holders of the stock (ITZ PIX) to roll up from a Dec $15 call to a Dec $16 call option. I believe that SLW will be below the $16 strike by opex Dec 15th. Below is a video clip on some other option trades.

Monday, November 16, 2009

Meredith Whitney, in an interview with CNBC, said she was disappointed that Bernanke didn't spell out how the Fed planned to exit "the biggest Fed program to date, which is the mortgage-backed purchase program."

"I haven't been this bearish in a year," Whitney said. "I look at the board and every single stock from Tiffany to Bank of America to Caterpillar is up. But there is no fundamental rooting as to why these stocks are up—particularly in the consumer space."

I don't necessarily agree with her outlook on "all" stocks, on financials yes however. I still believe the dollar longer term will trend lower and the dollar carry trade [gold, oil, commodities] will continue.

Deutsche Bank upgraded select dry bulk shipping stocks this morning. In a research note this morning, the firm upped its target on Genco Shipping (GNK) to $31 from $24. As I type GNK is trading at $27.40.
RECAP: I've suggested GNK twice @ $22.90 with a covered call Jan $25 GNK-AE for $1.70 bringing the cost basis to $21.20. Also a second re-recommendation @ $19.50 & covered call GNK-AE @ $2.20 cost basis $17.30. If GNK is trading over $25 on Jan15th expiration the returns will be 19.7% & 44.5% respectively. If you were to sell today @ $27.40 on a non-covered call basis [$22.90 & $19.50] the returns would be +19.6% & +40.5%. Lets see where we stand as we approach expiration...if the stock declines along with time decay on the option premium, I may suggest rolling up & out or just letting the stock get called, we have about 8 weeks until that occurs.

This moning on CNBC: John Maccarone, CEO of Textainer, discusses the health of the shipping business and the overall economy. Mentions possible 'Inventory Restocking'...hmmm???
*click chart to expand image

Fed Chairman Ben Bernanke will speak at the Economics Club of New York at noon today and the topic will be "Economic Outlook." Needless to say all eyes will be on the Fed chief on hopes he will slip and give us some indication of what he is really thinking. This could end up being the most important economic event for the week. My guess is he will state inflation isn't a problem [yet] and that the economy is slowly improving... so what else is new?

On Friday the CEO of Exxon said, that $20-$25 of the price of oil was due to dollar speculation. Well like that was a surprise! I'm still holding to my guns and targeting $90+ oil by year end and $100 + in 2010. My 2 plays in the energy sector continue to be Transocean (RIG) & Pride Int'l (PDE).*click chart to expand image

Reviewing some long term Gold/Oil Ratio charts back to the '70s. As I written of late, just to recap... Gold trades about 3 to 4 months ahead of oil. In the near term I see gold retracing to 1075 along with oil to $74 and the dollar ticking up to 76. (see prior posts). NOW...on the longer term outlook Gold should most likely hit $1200 and eventually $1300 in '10. Now looking at the historical range of the Gold/Oil Ratio (currently 14)..if the ratio were to remain here and gold rise to $1200, oil ($WTIC) would trade @ $85/$86. I see 12:1 as a level it would most like trend to, WHY? based on the dollar trending lower to 72. It could even trend lower, maybe 10:1...but to remain conservative I say 13:1 for now...OK! So let extrapolate? Gold at $1100 & the ratio at 13 oil should trade at $85, 12:1 $92. Gold at $1200 next.. 13:1 = $92 oil; 12:1 = $100. Now you do the math!

I remain bullish on gold & silver and believe more should be added to the oil sector, Transocean (RIG) & Pride Int'l (PDE) are my favorite plays.

It all rest on the US Dollar ($USD), President Obama is now in China, where he should be helping, but unfortunately he and his administration are hurting the dollar (see Kudlow video) and that just enforces my believe of a lower dollar, longer term and higher gold/oil prices.
*click chart to expand images

In a recent post I noted that Juniper Networks was a possible take over after Hewlett-Packard's bid for 3COM. ~read post~

Well my post was written after the market's close and I suggested one take a look at Juniper (JNPR) since it was down in after-hours trading. JNPR entered the Itz Pix portfolio @ $24.75. Today Oppenheimer issued an outperform rating on Juniper.*click chart to expand image

Pride Int'l (PDE) has entered the Itz Pix Radar Screen. Note the similarities to June/July chart patterns, I'm targeting $30/$31 as a suggested entry level. The drillers (Transocean RIG another Itz Pix holding) have a 93% correlation to crude oil ($WTIC). It is another pure play on a lower dollar. I'm looking for a brief near term rally in the dollar and for oil to fallback to $74 support. In conjunction I see gold putting in a retracement also to $1075. So, look for PDE as well as RIG to pullback here and give you another opportunity to get in. I continue to see gold trend higher and oil (a laggard to gold) to follow the trend higher as the US Dollar ($USD) heads lower on a longer term basis. In the CNBC Video, Tom Petrie, Banc of America Securities Merrill Lynch vice chairman echoes my outlook for oil.
*click chart to expand image

Keep an eye on $41/$42 levels, watch for Sell Volume to spike to previous level (50/60M). I believe that buyers will step in as the support/200-ma levels are tested, JPM is 'Best of Breed' with '09 eps pf $2.10 & '10Est of $3.40 I see pe expansion, price objective in 12 months $65.*click charts to expand images

The focus of late has been on gold and it's breakout, I see it pulling back over the next week. But in the next several months hitting $1200+. Now crude oil $WTIC has been range bound the last several weeks, however it to will be breaking out. Oil lags gold by 3 to 4 months. I posted several charts, one I really track is the $GOL:$WTIC ratio, which has been tracking the US Dollar $USD. If the dollar breaks lower and gold hits my $1200 target, just a 12:1 ratio will put crude oil @ $100 and a 10: ratio @ $120. My favorite and suggest Itz Pix play is Transocean (RIG)...which could easily rally 20% near term.*click chart to expand image

Genco (GNK) has been in rally mode since $19.50 & hit my near term targetof $25. Thos who did not initiate the covered call suggestion, should take some profits or consider selling the Jan $25 to reduce their cost basis. So what's next? My indicators point to a pullback to the $21 level, at which I'll consider possibly buying back the calls as time decay kicks in, or perhaps rolling up & out. Or may just decide to let the shares get called...we'll see as we approach opex.Interesting report today ~read story~*click on chart to expand image

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